International Trade and Institutional Change: Medieval Venice's Response to Globalization

42 Pages Posted: 10 Aug 2012 Last revised: 22 Jun 2022

See all articles by Diego Puga

Diego Puga

Centre for Monetary and Financial Studies (CEMFI)

Daniel Trefler

University of Toronto - Rotman School of Management; National Bureau of Economic Research (NBER)

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Date Written: August 2012

Abstract

International trade can have profound effects on domestic institutions. We examine this proposition in the context of medieval Venice circa 800-1350. We show that (initially exogenous) increases in long-distance trade enriched a large group of merchants and these merchants used their new-found muscle to push for constraints on the executive i.e., for the end of a de facto hereditary Doge in 1032 and for the establishment of a parliament or Great Council in 1172. The merchants also pushed for remarkably modern innovations in contracting institutions (such as the colleganza) that facilitated large-scale mobilization of capital for risky long-distance trade. Over time, a group of extraordinarily rich merchants emerged and in the almost four decades following 1297 they used their resources to block political and economic competition. In particular, they made parliamentary participation hereditary and erected barriers to participation in the most lucrative aspects of long-distance trade. We document this 'oligarchization' using a unique database on the names of 8,103 parliamentarians and their families' use of the colleganza. In short, long-distance trade first encouraged and then discouraged institutional dynamism and these changes operated via the impacts of trade on the distribution of wealth and power.

Suggested Citation

Puga, Diego and Trefler, Daniel, International Trade and Institutional Change: Medieval Venice's Response to Globalization (August 2012). NBER Working Paper No. w18288, Available at SSRN: https://ssrn.com/abstract=2127552

Diego Puga

Centre for Monetary and Financial Studies (CEMFI) ( email )

Casado del Alisal 5
28014 Madrid
Spain

Daniel Trefler

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-978-4190 (Phone)
416-978-6713 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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